Cancelled Cards (3/8/99)
FULL STORY:
The FDIC is pulling the plug on 440,000 BestBank VISA credit cards this
week. However about 13,000 BestBank card accounts, mostly secured VISA
cards, will remain open until a buyer is found. The card accounts to be
closed were those involved in a travel club program. The bank offered a
VISA card with a $600 credit line if the applicant agreed to charge $500 in
dues for a related travel club. The cards were offered to all consumers
including those with a poor credit history. The Colorado bank failed last
July and was taken over by the FDIC after it was discovered that its credit
card program caused the bank to become severely undercapitalized. In its
efforts to unload BestBanks' cards the FDIC sent out portfolio details to
132 interested parties and received a total of six bids. One deal was
accepted and was set to close Jan 29. However, after two extensions, the
FDIC decided last week to withdraw the portfolio from the marketplace.
Civil lawsuits and a criminal investigation continues.